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Medicaid Premium Assistance Programs: What Information is Available About Benefit and Cost-Sharing Wrap-Around Coverage?

Key Findings About Wrap-Around Benefits and Cost-Sharing

Premium Assistance Program Enrollment

States serve relatively small numbers of people in premium assistance programs that pre-date the ACA’s Medicaid expansion. Enrollment in the premium assistance programs in states we examined ranges from 93 people in Nevada in 2014 to over 26,000 people in Texas in 2012 (Table 1). Despite wide state-level variation, enrollment in state premium assistance programs was a very small proportion of total Medicaid enrollment across all of the states. Enrollment in premium assistance accounted for 5% of total enrollment in Rhode Island and Vermont, and was less than 1% in all other states examined by this study.1 This relatively low enrollment in premium assistance programs compared with total Medicaid enrollment is consistent with earlier research on premium assistance programs in Medicaid.2

Some states target high cost/high need populations for their premium assistance programs. Similar to the GAO report, our survey found that some premium assistance programs (Alabama and Louisiana) specifically reach out to pregnant women, while others (Nevada) target people with conditions that incur high medical costs such as AIDS and cerebral palsy. Targeting populations with high needs may make sense for states seeking to ensure that their premium assistance programs are cost-effective. However, given their more extensive health care needs, this population may be even more likely to need access to wrap-around coverage for services that are available through Medicaid but not through private insurance.

Table 1:
State Premium Assistance Program Enrollment and Expenditures
From 2014 KCMU/CCF Survey
State Program Name Total State Spending on Premium Assistance* % of State Spending on Premium Assistance For Wrap-around Benefits Total Enrollment in Premium Assistance Per Enrollee Cost Data Year
Alabama Health Insurance Premium Program $478,444 49.0% 127 $3,767 FY 2014
Louisiana Health Insurance Premium Assistance Program $6,576,418 14.4% 4,502 $1,461 FY 2014
Nevada Health Insurance Premium Program $501,058 N/R 93** $5,388 FY 2014
Rhode Island Rite Share $13,073,000 69.6% 9,779 $1,337 FY 2014
Texas Health Insurance Premium Payment Program $140,520,309 N/R 26,244 $5,354 FY 2012
Utah*** Utah Premium Partnership for Health Insurance $722,509 48.1% 813 $889 FY 2014
Vermont**** Catamount Health & Employer-sponsored premium assistance N/R N/R N/R N/R N/R
Wisconsin BadgerCare Health Insurance Premium Program $163,032 N/R 133* $1,226 FY 2013
NOTES: All states utilize premium assistance for employer-sponsored insurance; some states also provide premium assistance for COBRA and/or other group coverage. Data are presented for the most recent fiscal year available. Enrollment reflects data for the full year with the exception of Nevada, which reflects average monthly enrollment. Total state spending on premium assistance and per enrollee costs were calculated by KCMU/CCF based on premium assistance program spending and enrollment data provided by states. *Total state spending includes the following – AL: premiums, services  fr Enrolle Costfor the table to reflect this. hthe ees; , and d to usin the revised text box-sponsored Insurance (ESI)es that r not covered by private insurance but paid by Medicaid, and cost-sharing; LA: premiums, total wrap-around charges, administration fees; NV: premiums; RI: premiums, total wrap-around charges; TX: premiums; cost-sharing, administration fees; UT: state reported total expenditure; VT: premiums, benefits wrap-around; WI : state reported total expenditure.**Reflects average monthly enrollment. *** Utah only provides wrap-around coverage for CHIP dental services. CMS, Factsheet for Utah Primary Care Network Section 1115 demonstration program (Dec. 19, 2014), available at http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/ut/ut-primary-care-network-fs.pdf. ****VT discontinued its program in 2014. SOURCE: 2014 KCMU/CCF survey of state officials in state premium assistance programs that reported spending on wrap-around benefits to GAO in 2009.

Premium Assistance Program Spending

Few states report how much is spent on wrap-around benefits in their premium assistance programs, and to the extent that limited data are available, spending on wrap-around benefits as a percentage of total premium assistance program spending varies considerably among states.  Of the eight states we studied, four (Alabama, Louisiana, Rhode Island, Utah) reported spending for wrap-around benefits in 2014, and these data demonstrate variation in this spending among states (Table 1). The other states that responded to the survey noted their inability to break out costs for wrap-around benefits and were only able to report total spending for their premium assistance program.

The lack of data on spending devoted to wrap-around benefits in Medicaid premium assistance programs makes it difficult to assess the extent to which beneficiaries are accessing those benefits. Better data in this area would improve the ability of states and other stakeholders to determine whether beneficiaries are receiving wrap-around services. The availability of spending data broken down into categories, such as wrap-around benefits and wrap-around cost sharing protections, also could improve program monitoring and evaluation efforts. As one example, Utah is able to report the amount that it spends on the single wrap-around benefit that it offers in its premium assistance program, dental services for children (see Table 1 and Box 1).

Box 1: Utah’s Wrap-Around Coverage Focused on Dental Benefits
The wrap-around benefits provided in Utah’s premium assistance program are more limited in scope relative to other states’ programs. Operating under the authority of a Section 1115 demonstration, the Utah Premium Partnership for Health Insurance (UPP) subsidizes employer and individual coverage for families. UPP provides an additional $20 per month subsidy to purchase employer-sponsored dental coverage for children; however, there is no wrap-around for cost-sharing charges so families have to cover any cost-sharing associated with their employer-sponsored dental insurance. Alternatively, Utah’s program provides wrap-around coverage solely for children’s dental benefits for CHIP eligible children by allowing children with employer-sponsored coverage that omits dental benefits to enroll in the state’s CHIP dental plan.3 The narrow focus of Utah’s wrap-around coverage may be easier for beneficiaries to navigate and for the state to administer because the state only subsidizes one specific benefit rather than providing access to a range of wrap-around services. According to our survey, in FY 2014, UPP enrolled 813 children in its premium assistance program with a per capita cost of $889 (based on $347,861 in state expenditures for wrap-around dental coverage provided through CHIP and $722,509 in total state premium assistance program expenditures including monthly premium subsidies).

The lack of data on spending devoted to wrap-around benefits in Medicaid premium assistance programs also makes it difficult to assess whether these programs are cost-effective. Only two states (Louisiana, Texas) were able to break out spending for the administrative costs for their premium assistance programs in their responses to our survey. States are required to evaluate cost-effectiveness as part of determining eligibility for premium assistance, and this determination must include spending on wrap-around benefits and cost-sharing protections as well as administrative costs. Better data about spending devoted to the various components of premium assistance programs would allow for a more accurate assessment of cost-effectiveness.

Overall state spending on premium assistance programs varies considerably by state. Per enrollee spending ranged considerably in 2014, from a low of $1,337 in Rhode Island to a high of $5,388 in Nevada (Table 1). This is likely a result to some degree of the fact that states serve different populations in their programs as well as relatively low program enrollment, which could result in wide variation in per capita costs; however, it also may reflect state challenges in tracking premium assistance costs.

Access to Wrap-around Benefits

Of the seven states we examined,4 the clarity of the written materials provided to beneficiaries about how to access wrap-around benefits varied, and no state clearly conveyed the availability of EPSDT wrap-around services for children. This was despite the fact that all states targeted families with children in their premium assistance program enrollment materials. Federal regulations require states to use clear non-technical language to inform Medicaid-eligible children and their families about EPSDT, including what services are available and where and how to obtain those services.5 EPSDT is a broad benefit that includes regular screenings; vision, dental, and hearing services; and any treatment services necessary to correct or ameliorate physical or mental health conditions, regardless of whether such services are covered under the state’s adult benefit package.6

Rhode Island’s materials most clearly conveyed the availability of wrap-around benefits and described some of the benefits that EPSDT provides such as dental and vision services. Rhode Island’s premium assistance program booklet for beneficiaries explains that enrollees receive two cards – a private health plan card and a Medical Assistance Card. The booklet goes on to explain that “[t]he Medical Assistance Card is used for a few extra covered benefits listed in this booklet,” and provides details on eye care, dental services, bus passes, interpreter services, additional services that have limits in the employer plan (such as physical, occupational, and speech therapy; and mental health and substance abuse services), and over-the-counter medicine.7 Other examined states did not provide any explicit or more generalized description (similar to Rhode Island’s) of the kinds of services that children are guaranteed through the EPSDT benefit and should be able to access even when enrolled in employer-sponsored insurance.

Two states we examined, Texas and Alabama, did refer to beneficiaries’ ability to receive Medicaid covered services on a wrap-around basis, but without any explanation of what those might be. Texas’ online description of its premium assistance program states that “[o]f course, Medicaid will pay for services not covered by the employer-sponsored insurance, as long as they are Medicaid-covered services provided by a Medicaid provider.”8 While Alabama’s frequently asked questions for its premium assistance program explain that “[o]nce you are enrolled in the AL HIPP program, you will have access to benefits from both programs,”9 the program flyer that Alabama uses instead highlights that premium assistance includes “[c]overage of group health insurance AND Medicaid … including benefits Medicaid may not cover.”10 Nevada’s beneficiary brochure states that “Medicaid covered services may be included if covered through the employer health insurance,”11 which does not assure beneficiaries that Medicaid benefits outside of the employer-sponsored insurance will be covered (emphasis added).

It is worth noting that in addition to written materials, a number of states also mentioned toll free numbers or third party contractors who were available to answer questions about the program as a way of educating beneficiaries about how to access premium assistance benefits. Utah’s program materials are primarily designed to inform families about the larger Utah Premium Partnership program as dental services are the only wrap-around benefit available to children eligible for CHIP. The state does include a FAQ about dental coverage which clarifies that parents can receive $20 per month towards the cost of their employer’s dental coverage or enroll in the CHIP dental plan.12

By contrast, some states’ written materials made the opposite point, underscoring that the private health plan may cover services that are not covered by Medicaid. Beneficiary materials in Alabama, Louisiana, and Nevada all highlight that private insurance may cover benefits that Medicaid does not cover. For example, Louisiana’s materials highlight that employer-sponsored health insurance “may cover services that Medicaid doesn’t cover” rather than the reverse (i.e., that Medicaid is likely to cover services that your employer’s plan does not).13 Wisconsin enrollees receive a lengthy booklet about enrollment and benefits which describes the situations in which a family might be able to enroll in their employer-sponsored insurance but does not describe how premium assistance or the wrap-around benefits work in practice. However, the state indicated in its survey response that state staff calls and details the plan to the member at the time of enrollment.

Access to Wrap-Around Cost-Sharing Protections

States have different policies about how they administer wrap-around cost-sharing protections in their premium assistance programs, with most protecting beneficiaries from making upfront payments in excess of Medicaid limits. According to survey responses, in some states (Louisiana, Nevada, Texas), Medicaid beneficiaries receiving premium assistance do not pay cost-sharing or out-of-pocket charges directly. In Alabama and Wisconsin, beneficiaries are responsible only for paying out-of-pocket co-payments at Medicaid levels. By contrast, in Rhode Island, beneficiaries must pay the full cost-sharing required by the private plan upfront when receiving services and then are reimbursed monthly.

In six states, our survey found that wrap-around cost sharing protections are available only if beneficiaries receive services from a provider who is both in their private insurance plan network and also accepts Medicaid.14 If the provider does not accept Medicaid, beneficiaries must pay the entire cost of the service out-of-pocket. Thus, a family who is enrolled in their employer-sponsored insurance (ESI) with the help of Medicaid premium assistance may have to pay cost-sharing that exceeds Medicaid limits to have access to the full range of providers included in the ESI network, if all of those providers do not also accept Medicaid. Some of the premium assistance programs we examined target high-cost populations who may need specialty services and are likely frequent users of health care services. These populations may benefit from access to a private insurance network that is broader than the Medicaid provider network, but they also are unlikely to be able to afford out-of-pocket cost-sharing in excess of Medicaid limits. It is likely that beneficiaries may find that the need to see a provider who accepts both their private coverage and Medicaid further restricts their provider options rather than expanding them.

Beneficiaries may be unaware that they must see a provider who accepts both their private insurance plan and Medicaid to receive wrap-around cost-sharing protections. While written beneficiary materials overall were more clear about how to access wrap-around cost-sharing protections than wrap-around benefits, they did not consistently inform beneficiaries that they needed to see a Medicaid-participating provider to receive wrap-around cost-sharing protections. Some states’ materials are explicit on this point. For example, Rhode Island’s materials clearly state this limitation by informing beneficiaries that “[i]f you go to a provider who does not accept Medical Assistance, you will be required to pay the co-payment.”15 In addition, Alabama’s materials state that “[q]ualified Medicaid recipients have most out-of-pocket expenses covered by Medicaid when a recipient elects to go to a Medicaid provider,”16 and similarly, Texas’ materials state that “Medicaid pays the co-pays and deductibles when people with HIPP and Medicaid see a Medicaid doctor.”17 By contrast, Louisiana’s beneficiary flyer does not mention that the state will only cover cost-sharing charges for providers who also accept Medicaid,18 although it does point out that “[i]f you have both Medicaid and other health insurance coverage, you may get increased access to primary care doctors, specialty care doctors, and hospitals.”19 Alabama’s HIPP guide and application brochure state that “[m]embers receive … access to a wider network of doctors through group insurance coverage” while the application mentions that “Medicaid recipients’ out-of-pocket medical costs will be paid by Medicaid if they receive treatment from a Medicaid provider.20 Wisconsin provides a lengthy information packet to potential Medicaid beneficiaries, which includes only a small subsection on premium assistance and does not discuss limitations on accessing wrap-around cost-sharing.21

Post-ACA Premium Assistance Programs

Since 2014, a small number of states have included one or more premium assistance components as part of a Section 1115 waiver using an alternative approach to implementing the ACA’s Medicaid expansion.22 These programs differ from the premium assistance programs we examined in that they may cover a greater number of beneficiaries and often they use Medicaid premium assistance to purchase individual Marketplace coverage. Arkansas was the first state to adopt this model and requires all newly eligible Medicaid beneficiaries to enroll in Marketplace premium assistance.23 New Hampshire will be implementing a similar approach in 2016.24 Iowa initially required Marketplace premium assistance for newly eligible adults with income between 100-138% of the federal poverty level, but the program is now voluntary due to the loss of one of the two Marketplace plans that covered Medicaid beneficiaries.25

Some state Medicaid expansion waivers also include provisions for more traditional premium assistance programs for the purchase of employer-sponsored coverage; these are relatively small parts of the expansions approved in Iowa (which enrollment is required) and Indiana (voluntary enrollment).26 Other states that have debated the Medicaid expansion also have considered gubernatorial or legislative proposals that include premium assistance models.27 For example, Tennessee’s proposal included voluntary premium assistance for employer-sponsored coverage,28 and Utah’s proposal required premium assistance for Marketplace or employer-sponsored coverage.29 This trend may continue as states that have not yet expanded Medicaid may be more inclined to favor the use of program designs that emphasize private coverage or other features that require waiver authority.

CMS generally has not allowed states with Medicaid expansion waivers using premium assistance to waive benefits in lieu of providing wrap-around coverage. The one exception is limited permission to waive non-emergency medical transportation benefits in Iowa30 and Indiana.31 For all remaining benefits that are not covered in the private insurance package, states electing to use premium assistance must provide wrap-around coverage. For example, Arkansas is providing both non-emergency medical transportation and EPSDT services for 19- and 20-year-olds through its Medicaid fee-for-service program as a wrap-around benefit for newly eligible adults (see Box 2).

Box 2: Wrap-around Coverage for Early and Periodic Screening, Diagnostic, and Treatment Benefits in States Using Marketplace Premium Assistance to Expand Medicaid
Newly eligible individuals who are ages 19 and 20 are treated as adults for the purposes of eligibility under the ACA’s coverage expansion, but they are also entitled to the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit package that Medicaid provides to all children up to age 21. CMS has not allowed any state to waive these benefits for 19 and 20 year olds eligible through the Medicaid expansion. As a result, this group receives EPSDT benefits via wrap-around coverage in states requiring newly eligible adults to enroll in Marketplace coverage using premium assistance to expand Medicaid.

To date, data about beneficiary access to wrap-around EPSDT benefits in Medicaid expansion waivers are available only for Arkansas. All newly eligible Medicaid beneficiaries in Arkansas receive coverage via premium assistance for Marketplace health plans, which do not cover the full extent of services required by EPSDT, such as vision and dental services. Arkansas provides EPSDT benefits through its fee-for-service Medicaid program on a wrap-around basis. In 2014, there were 9,971 newly eligible 19 and 20 year olds entitled to EPSDT benefits in Arkansas, although only 1,048 people in this group utilized wrap-around benefits, according to the state’s Department of Human Services. The total annual cost to provide wrap-around EPSDT benefits to newly eligible 19 and 20 year olds was $214,385, or $22 per capita, for all those eligible for EPSDT wrap-around benefits in Arkansas.32

CMS also generally has required states using Medicaid premium assistance for their new adult expansions to impose cost-sharing within Medicaid limits. This means that states electing premium assistance must determine how to administer wrap-around cost-sharing protections. Like most of the pre-ACA premium assistance programs that we examined, Arkansas’ approach to wrap-around cost-sharing protections shields beneficiaries from having to front high out-of-pocket costs and be reimbursed later.33 Because Arkansas is using a limited number of Marketplace plans for its premium assistance program, it may be administratively easier to implement this approach to wrap-around cost-sharing than in states that offer premium assistance for anyone with any employer-sponsored coverage.

Conclusion

As states’ interest in Medicaid premium assistance models continues, further research is needed to examine the beneficiary experience in these programs. This is especially true for access to wrap-around benefits and cost sharing protections, as little data presently is available in this area. Premium assistance approaches could have political and practical advantages for enrollees, and implementation of new programs in the context of alternative Medicaid expansions can be informed by states’ experiences with long-standing programs. At the same time, wrap-around benefits add a layer of complexity for beneficiaries, providers, and states in premium assistance programs. Explaining how the wrap-around works is a challenge, especially when broad benefits that may not be fully included in private coverage, like EPSDT, are involved. Given the complex nature of these programs and variation in state implementation, the extent to which enrollees have access to the full Medicaid benefit package and cost sharing protections is an area for continued study.

In addition, to the extent that Medicaid beneficiaries enrolled in premium assistance programs do not have access to wrap-around cost sharing protections unless they see Medicaid providers, beneficiaries are not receiving one of the key advantages often cited by proponents of premium assistance – access to a wider network of providers. Educational materials provided to beneficiaries do not always clearly explain the availability of wrap-around benefits and cost sharing protections, particularly EPSDT, and varied considerably in the states we examined. As more states consider premium assistance models to serve greater numbers of beneficiaries, the need to understand how to best administer wrap-around benefits and cost-sharing protections is of growing importance.

Joan Alker and Sean Miskell are with the Georgetown Center on Children and Families. MaryBeth Musumeci and Robin Rudowitz are with the Kaiser Family Foundation.

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